Energy Drinks Push C-store Beverage Sales Higher

NEW YORK – The near future looks bright for non-alcoholic beverages at convenience stores, which remain strong and are projected to see 4 percent year-over-year sales growth, according to the latest Beverage Buzz survey by Wells Fargo Securities LLC. The ongoing strength of energy drinks, along with bottled/enhanced water and sports drinks, offset expected declines of carbonated soft drinks (CSDs).

The survey of retailers representing more than 15,000 U.S. c-store locations also found that the energy segment has shown the most growth of any beverage segment in the c-store channel and it is taking shelf space from other categories. In particular, Monster Energy is doing well and outpacing growth of the segment. Overall, retailers reported that energy drinks make up 31 percent of current beverage sales.

Improved weather from last year was the greatest factor in improved expectations for the beverage category, and industry insiders are generally encouraged by better operating conditions for this quarter and the remainder of this year, according to Bonnie Herzog, managing director of beverage, tobacco and convenience store research at Wells Fargo Securities.

Over the recent Fourth of July holiday weekend, beverage sales were up 5.2 percent compared to 2.7 percent in 2013. Additionally, more than half of surveyed retailers reported that sales increased by more than 5 percent over the July Fourth weekend, compared to only 22 percent who reported the same one year ago.

"This extends the solid results that c-store retailers saw over the Memorial Day holiday, and generally bodes well for both beverage manufacturers and c-stores," Herzog wrote.

Survey results also indicate that The Coca-Cola Co. is continuing to take CSD share and PepsiCo Inc. beverage sales are continuing to improve, partly due to more aggressive holiday promotions, according to the report.

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